TruLogic, Inc. v. Gen. Elec. Co.

[Cite as TruLogic, Inc. v. Gen. Elec. Co., 2021-Ohio-2860.]

IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
GREENE COUNTY

TRULOGIC, INC. :
:
Plaintiff-Appellant : Appellate Case No. 2021-CA-3
:
v. : Trial Court Case No. 2020-CV-464
:
GENERAL ELECTRIC COMPANY : (Civil Appeal from
through its GEA DIVISION : Common Pleas Court)
:
Defendant-Appellee :

...........

OPINION

Rendered on the 20th day of August, 2021.

...........

D. JEFFREY IRELAND, Atty. Reg. No. 0010443, BRIAN D. WRIGHT, Atty. Reg. No.
0075359 and DONALD E. BURTON, Atty. Reg. No. 0040553, 110 North Main Street,
Suite 1600, Dayton, Ohio 45402
Attorneys for Plaintiff-Appellant

APRIL L. BESL, Atty. Reg. No. 0082542 and JACI L. OVERMANN, Atty. Reg. No.
0089306, 255 East Fifth Street, Suite 1900, Cincinnati, Ohio 45202
Attorneys for Defendant-Appellee

.............

WELBAUM, J.
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{¶ 1} Plaintiff-Appellant, TruLogic, Inc., appeals from a judgment granting a Civ.R.

12(B)(6) motion filed by Defendant-Appellee, General Electric Company through its GEA

Division (“GEA”). According to TruLogic, the trial court erred in concluding that its claims

for breach of contract and unjust enrichment were preempted by federal copyright law.

{¶ 2} We conclude that TruLogic’s claim for breach of contract was not preempted

by federal copyright law. A software licensing agreement may involve the required extra

element (instead of or in addition to the acts of reproduction, performance, distribution, or

display) that changes the action’s nature so that it is qualitatively different from a copyright

infringement claim. Under the allegations of the complaint, accepted as true, TruLogic’s

restriction of the use of its software and other restrictions in the software licensing

agreement provided the extra element required to avoid preemption.

{¶ 3} However, the trial court did not err in dismissing TruLogic’s claim for unjust

enrichment. Unjust enrichment involves a contract implied in law. Where an express

agreement exists, there can be no implied agreement. Further, while parties are

permitted to plead alternative claims, the allegations in the complaint and the attached

software licensing agreement provided that the written agreement was the entire

agreement of GEA and TruLogic and superseded all prior or contemporaneous oral or

written communications, proposals, and representations with respect to TruLogic’s

software or any other subject matter covered by the software agreement. As a result,

regardless of preemption, there could be no claim for unjust enrichment.

{¶ 4} Finally, even if we needed to address preemption of the unjust enrichment

claim, TruLogic’s minimal defense of the claim did not address the reasons why
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preemption law distinguishes between contracts implied in law and those based on either

an express contract or one implied in fact. Specifically, contracts implied in law do not

involve allegations of actual promises between the parties. Such promises can provide

the required extra element to avoid preemption.

{¶ 5} Accordingly, TruLogic’s first assignment of error will be sustained and its

second assignment of error will be overruled. The judgment, therefore, will be reversed

in part and affirmed in part, and this cause will be remanded for further proceedings.

I. Facts and Course of Proceedings

{¶ 6} Before we discuss the factual background, we note that this case is before

us following a Civ.R. 12(B)(6) dismissal. As a result, we will accept the facts alleged in

the complaint as true. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d

753 (1988).

{¶ 7} According to the complaint, TruLogic was founded in 1998 and provides

electronic data solutions to the United States and foreign military services, as well as to

automotive systems manufacturing facilities. TruLogic specializes in products and

services supporting “technical writing, illustrating, data management, and publishing.”

Complaint at ¶ 4.

{¶ 8} In 2000-2001, TruLogic used its proprietary publishing platform, TruView™,

to develop Interactive Electronic Technical Manuals (“IETMs”) for the United States Navy.

Id. at ¶ 5. Shortly thereafter, in 2002, GEA expressed an interest in having TruLogic

replace its current supplier of IETMs for engine-related technical services to the United

States Air Force (“USAF”). Id. at ¶ 6. After TruLogic demonstrated its product and bid
 -4-

on the work, GEA awarded TruLogic a four-year contract to supply IETMs. These IETMs

incorporated GEA data for the USAF’s use in connection with its use of GEA products.

Id. at ¶ 7. In addition, as GEA’s service supplier, TruLogic performed the routine update

service of Standardized Generalized Markup Language (SGML)-based aircraft engine

technical manuals and “provided modified, GE-branded Interactive Electronic Technical

Manual (IETM) products from 2002 to 2012 utilizing TruLogic’s pre-existing commercial

software products.” Id. at ¶ 8.

{¶ 9} TruLogic again bid on the GEA IETM contract in 2006 and won the bid, thus

continuing contractual relations with GEA on the USAF contract until 2012. Id. at ¶ 9-10.

In order to fulfill the contract for IETM deliverables, TruLogic licensed the use of the IETMs

that it had developed to GEA and its customer, USAF. Id. at ¶ 11. Although GEA

supplied the technical content, TruLogic developed the style and format, and it produced

the IETMs using its proprietary, copyrighted publishing platform, TruView™. Id.

TruView™ pre-existed TruLogic’s contractual relationship with GEA and was not

developed as part of that relationship. Id. at ¶ 12. “TruLogic has never given GEA or

anyone else the right or option to reverse-engineer or to reuse components of its

software.” Id. at ¶ 14.

{¶ 10} Beginning in 2008, TruLogic licensed IETMs to GEA under an end user

license agreement (“EULA”), which let GEA use the IETM in its deliverables to GEA

customers. Complaint at ¶ 15. However, the EULA restricted any other uses, “including

specifically prohibiting any repurposing or creation of derivatives of the TruView™ IETM.”

Id. TruLogic attached a copy of the 2008 EULA to the Complaint, and while it has been

updated from time to time, the terms have essentially remained the same. Id. at ¶ 16-17
 -5-

and Ex. A (“2008 EULA”).

{¶ 11} The EULA was a “click-thru” agreement, and GEA and USAF could not have

used TruLogic’s software without accepting it; the license terms appeared at the time of

installation of TruView™, and users could not install the software if they did not click on

the button accepting the EULA. Id. at ¶ 18. In pertinent part, the EULA stated:

SOFTWARE LICENSE AGREEMENT

FOR GE AVIATION INTERACTIVE ELECTRONIC TECHNICAL MANUAL

(IETM) SYSTEM.

PLEASE READ THIS SOFTWARE LICENSING AGREEMENT

CAREFULLY BEFORE INSTALLING OR USING THE SOFTWARE.

BY CLICKING ON THE “ACCEPT” BUTTON DURING THE

INSTALLATION PROCESS, OR BY USING THIS SOFTWARE, YOU ARE

CONSENTING TO BE BOUND BY THIS AGREEMENT. IF YOU DO NOT

AGREE TO ALL OF THE TERMS OF THIS AGREEMENT, CLICK THE “DO

NOT ACCEPT” BUTTON AND THE INSTALLATION PROCESS WILL

TERMINATE.

2008 EULA, p. 1.

{¶ 12} According to the EULA, the GEA system consisted of three individually

copyrighted components. Id. at p. 1. The relevant component here is Component 1,

which was described as “TruView™ Interactive Electronic Technical Manual (IETM)

System SOFTWARE – a LICENSED BY-PRODUCT of the TruView™ Publisher (the

IETM CORE SOFTWARE) developed and owned by TruLogic, Incorporated.” Id.

Concerning Component 1, the EULA stated, in relevant part, as follows:
 -6-

SOFTWARE END-USER LICENSE AGREEMENT FOR COMPONENT 1 -

TRUVIEW INTERACTIVE ELECTRONIC TECHNICAL MANUAL (IETM)

SYSTEM SOFTWARE (the BYPRODUCT) (BRANDED – GE AVIATION

IETM*)

THIS IS A NONEXCLUSIVE LICENSE FOR COMMERCIAL COMPUTER

SOFTWARE – RESTRICTED RIGHTS

IMPORTANT – READ CAREFULLY. This TruLogic End-User License

Agreement (“EULA”) is a legal agreement between you (either an individual

or a single entity) and TruLogic, Incorporated for the TruView SOFTWARE

identified above, which may include computer SOFTWARE, associated

media, printed materials, and “online” or electronic documentation

(“SOFTWARE”). By downloading, installing, copying, or otherwise using

the SOFTWARE, you agree to be bound by the terms of this EULA. The

originating acquiring entity will be reimbursed the direct labor cost (the

service) associated with TruLogic’s IETM build process for the specific

IETM system affected upon return or certified destruction of the rejected

original master copies delivered and all copies reproduced or installed.

The SOFTWARE is protected by copyright laws and international copyright

treaties, as well as other intellectual property laws and treaties. TruLogic

or its suppliers own the title, copyright, and other intellectual property rights

in the SOFTWARE. The SOFTWARE is licensed, not sold.

GRANT OF NONEXCLUSIVE LICENSE. TruLogic, Inc., and its suppliers

grant you (“the Customer”) a nonexclusive, perpetual, fully paid-up license
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to use the TruView Interactive Electronic Technical Manual (IETM) System

SOFTWARE as provided.

GENERAL. You may reproduce the SOFTWARE (in its entirety), install

and use any number of copies of the SOFTWARE on any number of

computers, including workstations, terminals, or other digital electronic

devices, for the intended use.

CONTROL. The SOFTWARE shall be DISCLOSED, DISTRIBUTED,

CONTROLLED, HANDLED AND DESTROYED in an official capacity

commensurate with the statements provided on the title pages of the

documents contained within the accompanying customer-provided

TECHNICAL DATA. The expired SOFTWARE, including TruLogic’s set up

and all resulting installations shall be properly disposed of in a method that

prevents disclosure, unauthorized use and reassembly.

REDISTRIBUTION. If you reproduce and redistribute the SOFTWARE

your copy must be a true and complete copy of the SOFTWARE, including

TruLogic’s set up and all copyright notices, logos, end-user license

agreement and/or trademarks that appear in the SOFTWARE as received

from TruLogic. This SOFTWARE may be redistributed to support the IETM

distribution requirements of GE Aviation, its customers, authorized

suppliers and team members; the U.S. Air Force and authorized recipients

of the TECHNICAL DATA; other U.S. Government Agencies; U.S. State

Governments and authorized Foreign Governments only.

INTENDED USE. The SOFTWARE is licensed specifically to be used in
 -8-

an OFFICIAL USE ONLY capacity. The SOFTWARE is licensed for the

purposes of installing, hosting, navigating, displaying and recording

customer-provided technical data in an official capacity. You shall not use,

copy, disassemble, display, distribute or demonstrate the SOFTWARE or

its likeness for the purposes of soliciting, guiding, developing, defining or

improving competing products or services.

UNAUTHORIZED RELEASE. The SOFTWARE is Commercial Computer

SOFTWARE and as such is copyrighted by TruLogic under the Copyright

Act of 1976 (17 U.S.C. 106) and is licensed with restricted rights. The

SOFTWARE SHALL NOT be released or sold to the public nor shall it be

released under the Freedom of Information Act (DoD 5400.7-R).

INTELLECTUAL PROPERTY RIGHTS – SOFTWARE. All rights and

intellectual property rights in and to the SOFTWARE (including but not

limited to any upgrades, modifications, images, photographs, animations,

video, audio, text and “applets” or other mechanisms incorporated into the

SOFTWARE), and any copies you are permitted to make herein are owned

by TruLogic or its suppliers.

INTELLECTUAL PROPERTY RIGHTS – CONTENT. All title and

intellectual property rights in and to the TECHNICAL DATA/TECHNICAL

CONTENT which may be accessed or recorded through use of the

SOFTWARE is the property of the respective content owner and may be

protected by applicable copyright or other intellectual property laws and

treatises. This EULA grants you no rights to use, copy or modify such
 -9-

content.

U.S. GOVERNMENT LICENSE RIGHTS. For U.S. Government users of

this SOFTWARE, the SOFTWARE shall be identified as having been

developed at private expense and as “restricted computer software”

submitted with restricted rights in accordance with subparagraphs (a)

through (c) of the Commercial Computer Software – Restricted Rights

clause of FAR 52.227-19 and its successors. For all units of the

Department of Defense, the SOFTWARE shall be identified as “commercial

computer software” or “commercial computer software documentation”

under the Rights in Computer Software and Computer Software

Documentation Clause of DFAR 252.227-7202-3(a) and its successors,

with all use, duplication or disclosure of same being subject to the license

and restrictions set forth in this EULA. The U.S. Government’s use of the

SOFTWARE constitutes acknowledgement of TruLogic’s proprietary rights

in them. Manufacturer is TruLogic, Inc., 1430 Oak Court, STE 311,

Beavercreek, Ohio 45430.

EXCEPT AS EXPRESSLY AUTHORIZED ABOVE, CUSTOMERS SHALL

NOT COPY, IN WHOLE OR IN PART, SOFTWARE OR

DOCUMENTATION; MODIFY THE SOFTWARE; REVERSE COMPILE OR

REVERSE ASSEMBLE ALL OR ANY PORTION OF THE SOFTWARE; OR

RENT, LEASE, DISTRIBUTE, SELL, OR CREATE DERIVATIVE WORKS

OF THE SOFTWARE.

PROTECTION OF TRADE SECRETS. Customer agrees that aspects of
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the licensed materials, including the specific design and structure of

individual programs, constitute trade secrets and/or copyrighted material of

TruLogic. Customer agrees not to disclose, provide, or otherwise make

available such trade secrets or copyrighted material in any form to any party

whose role is outside an Official Use Only capacity without the prior written

consent of TruLogic. Customer agrees to implement reasonable security

measures to protect such trade secrets and copyrighted material. Title to

the SOFTWARE shall remain solely with TruLogic.

2008 EULA at p. 2-4.

{¶ 13} After discussing various matters like warranties and indemnification, the

EULA further stated that:

BENCHMARK TESTING. You may not disclose the results of any

benchmark test using the SOFTWARE to any third party without TruLogic’s

prior written approval.

RESERVATION OF RIGHTS. TruLogic reserves all rights not expressly

granted herein.

LIMITATIONS ON REVERSE ENGINEERING, DECOMPILATION, AND

DISASSEMBLY. You may not reverse engineer, decompile, or

disassemble the SOFTWARE, except and only to the extent that such

activity is expressly permitted by applicable law notwithstanding this

limitation.

***

NO RENTAL. You may not rent, lease, or lend the SOFTWARE.
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COPYRIGHT STATEMENT.

This SOFTWARE is protected by United States copyright laws and

international treaties.

TruLogic, Inc. retains all right, title and interest in and to the SOFTWARE,

including the physical layout, fictional operation, graphic art and any other

information, manuals or data relating to the SOFTWARE and all rights under

any applicable copyrights, patents, trademarks, trade secrets, and other

“Proprietary Material” and to all copies you make. Proprietary Material

excludes information, technical data, or other viewable content that was

rightfully in your possession prior to receipt from us.

Customer-furnished information, technical data, and other viewable content

displayed in this product are the property of their respective owners.

You shall not: i) reverse compile, reverse engineer, disassemble or modify

the SOFTWARE; ii) use the SOFTWARE to develop, modify or improve a

SOFTWARE product; iii) disclose, publish, display or otherwise make

available to any persons the Proprietary Material.

Copyright 2000-2008 TruLogic, Incorporated.

TERMINATION. This license is effective until terminated. Customer may

terminate this license at any time by destroying all copies of SOFTWARE

including any documentation. This license may be terminated by TruLogic

for breach of a material term herein if Customer fails to cure such breach

after 90 days written notice to the Customer. Upon termination, Customer

must destroy all copies of SOFTWARE.
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***

ENTIRE AGREEMENT. This EULA (including any addendum or

amendment to this EULA which is included with the SOFTWARE) is the

entire agreement between you and TruLogic relating to the SOFTWARE

and the support services (if any) and it supersedes all prior or

contemporaneous oral or written communications, proposals and

representations with respect to the SOFTWARE or any other subject matter

covered by this EULA. To the extent the terms of any TruLogic or

programs for support services conflict with the terms of this EULA, the terms

of this EULA shall control.

2008 EULA at p. 5-7.

{¶ 14} In 2012, the relationship between TruLogic and GEA for the provision of

IETMs ended when GEA instituted a competitive bidding process and engaged another

supplier. Complaint at ¶ 22. TruLogic did retain a direct supplier relationship with the

USAF, but it incurred substantially diminished revenue from IETM services and products.

Id. at ¶ 23. Subsequently, in 2018, GEA sent potential suppliers (but not TruLogic) a

“Request for Rough Order of Magnitude (“ROM”) due to technical flaws in IETM materials

being delivered to GEA and its customers, and one of these potential suppliers asked

TruLogic for a quote for subcontracted assistance. Id. at ¶ 24-25.

{¶ 15} As part of the quote, TruLogic was asked to perform a technical evaluation

of the current IETM. During this process, TruLogic learned that GEA was using

TruLogic’s proprietary mark-up and scripting components in the IETM products, contrary

to the terms of the Software Licensing Agreement. Id. at ¶ 26-27. In particular, GEA
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had distributed the product without the required TruLogic Software Licensing Agreement;

had repurposed and reused TruLogic’s IETM in a derivative manner; had stripped out

TruLogic’s copyright notices and company name, while leaving in recognizable

thumbprints linked to TruLogic’s software; had used TruLogic’s artwork; and had used

TruLogic’s original navigation art, causing the defective GEA derivatives to be mistakenly

identified as TruLogic products. Id. at ¶ 28-32.

{¶ 16} According to the Complaint, GEA’s improper use had allowed it to acquire

sole-source contract awards from the U.S. Government for the USAF and Foreign Military

Sales Programs, had caused TruLogic’s products to be distributed as “freeware” to GEA’s

customers as well as TruLogic’s direct competitors, and had caused TruLogic to lose

contracts.

{¶ 17} On September 15, 2020, TruLogic filed a complaint in the Greene County

Common Pleas Court against GEA, alleging the above facts and asserting claims for

breach of the Software Licensing Agreement and unjust enrichment. GEA then filed a

motion to dismiss in November 2020, contending that TruLogic’s claims were preempted

by the U.S. Copyright Act, 17 U.S.C. 301. In addition, GEA contended that TruLogic had

failed to state a claim for either breach of contract or unjust enrichment. See Motion to

Dismiss (Nov. 16, 2020).

{¶ 18} After TruLogic responded to the motion, GEA filed a reply in support of its

motion to dismiss. On February 11, 2021, the trial court granted the motion to dismiss,

based on a finding that both of TruLogic’s claims were preempted by the Copyright Act.

TruLogic then timely appealed from the court’s decision.
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II. Breach of Contract Claim

{¶ 19} TruLogic’s first assignment of error states that:

The Greene County Court of Common Pleas Erred When, in Its

February 11, 2021 Judgment Entry Granting Motion to Dismiss, It Granted

Defendant’s Civ.R. 12(B)(6) Motion to Dismiss Plaintiff’s Claim for Breach

of Contract on the Ground of Preemption by Federal Copyright Law.

{¶ 20} Under this assignment of error, TruLogic contends that its breach of contract

claim should not been deemed to be preempted because a state law breach of contract

claim requires extra elements and extra proof beyond what is required for mere copying.

TruLogic further argues that the authority the trial court cited represented a minority view

and should not have been adopted. See TruLogic’s Brief, p. 10, discussing Wrench LLC

v. Taco Bell Corp., 256 F.3d 446 (6th Cir.2001). According to TruLogic, the trial court

should have instead followed the “majority approach” exemplified by ProCD, Inc. v.

Zeidenberg, 86 F.3d 1447 (7th Cir.1996).

{¶ 21} In response, GEA contends that the Supreme Court of Ohio has already

considered this issue, and it requires that the “extra element” in state law claims for breach

of contract “ ‘must change the state law so that it is qualitatively different from a copyright

infringement claim.’ ” (Emphasis sic.) GEA’s Brief, p. 8, quoting State v. Perry, 83 Ohio

St.3d 41, 42, 697 N.E.2d 624 (1998). In addition, GEA argues that ProCD is not the

majority view and that, instead, the majority approach uses a fact-based analysis much

like what was done in Wrench and Perry. Id. at p. 14.

{¶ 22} Before addressing these matters, we will briefly discuss our standard of

review.
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A. Standard of Review

{¶ 23} The law is well-established that orders granting Civ.R. 12(B)(6) motions to

dismiss are subject to de novo review. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79,

2004-Ohio-4362, 814 N.E.2d 44, ¶ 5. De novo review “means that we apply the same

standards as the trial court.” (Citations omitted.) GNFH, Inc. v. W. Am. Ins. Co., 172

Ohio App.3d 127, 2007-Ohio-2722, 873 N.E.2d 345, ¶ 16 (2d Dist.)

{¶ 24} In the context of motions to dismiss, this means that “[i]n construing a

complaint upon a motion to dismiss for failure to state a claim, we must presume that all

factual allegations of the complaint are true and make all reasonable inferences in favor

of the non-moving party.” Mitchell, 40 Ohio St.3d at 192, 532 N.E.2d 753. “Then, before

we may dismiss the complaint, it must appear beyond doubt that plaintiff can prove no

set of facts warranting a recovery.” Id., citing O'Brien v. Univ. Community Tenants Union,

42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus. Where, as here, documents are

attached to or are incorporated into a complaint, we may also consider the documents.

State ex rel. Washington v. D'Apolito, 156 Ohio St.3d 77, 2018-Ohio-5135, 123 N.E.3d

947, ¶ 10.

{¶ 25} With these points in mind, we will consider the parties’ arguments about

preemption.

B. Law Pertaining to Federal Copyright Preemption

{¶ 26} There is no real dispute in the law regarding how to initially analyze

preemption claims. “The federal copyright laws expressly preempt any state law actions

which govern ‘legal or equitable rights that are equivalent to any of the exclusive rights

within the general scope of copyright as specified by section 106 in works of authorship
 -16-

that are fixed in a tangible medium of expression and come within the subject matter of

copyright as specified by sections 102 and 103 * * *.’ ” Perry, 83 Ohio St.3d at 42, 697

N.E.2d 624, quoting 17 U.S.C. 301(a). “The statute thus creates a two-part inquiry: (1)

whether a work fixed in a tangible medium of expression is within the subject matter of

copyright and (2) whether the rights addressed are equivalent to the exclusive copyright

rights set out in Section 106, Title 17, U.S.Code.” Id.

{¶ 27} Perry involved a defendant’s appeal of a conviction “based solely upon the

unauthorized uploading, downloading, and posting of computer software on a computer

bulletin board.” Id. Concerning the first part of the inquiry, the court noted that under

1980 amendments to the Copyright Act, “computer software is to be treated as a literary

work for purposes of the Copyright Act.” Id. at 45, fn. 2. Therefore, the matter was

within the subject matter of copyright. Similarly, the case before us also involves

computer software.

{¶ 28} “The second prong of the preemption analysis – the so-called ‘equivalency’

or ‘general scope’ requirement – augments the subject matter inquiry by asking whether

the state common law or statutory action at issue asserts rights that are the same as

those protected under § 106 of the Copyright Act. Under § 301(a), even if appellants'

state law claims concern works within the subject matter of copyright, such claims will

only be preempted if they assert rights that are ‘equivalent to any of the exclusive rights

within the general scope of copyright as specified by section 106[.]’ ” (Footnote omitted.)

Wrench, 256 F.3d at 455-456, quoting 17 U.S.C. 301(a).

{¶ 29} The exclusive rights under Section 106 include authors’ “exclusive rights to

reproduce, prepare derivatives, perform, distribute, and display their work. Thus, ‘a right
 -17-

is equivalent to one of the rights comprised by a copyright if it “is infringed by the mere

act of reproduction, performance, distribution or display.” ’ ” Perry at 42-43, quoting

Baltimore Orioles, Inc. v. Major League Baseball Players Assn., 805 F.2d 663, 677 (7th

Cir.1986). (Other citations omitted.)

{¶ 30} “Equivalency exists if the right defined by state law may be abridged by an

act which in and of itself would infringe one of the exclusive rights. * * * Conversely, if an

extra element is required instead of or in addition to the acts of reproduction, performance,

distribution or display in order to constitute a state-created cause of action, there is no

preemption, provided that the extra element changes the nature of the action so that it is

qualitatively different from a copyright infringement claim.” (Emphasis sic.) Wrench at

456. See also Perry at 43, quoting United States ex rel. Berge v. Bd. of Trustees of Univ.

of Alabama, 104 F.3d 1453, 1463 (4th Cir.1997). (Other citation omitted.)

{¶ 31} In Wrench, the court found that the plaintiffs’ implied contract claim was not

preempted because it required an “extra element.” In this regard, the court observed

that:

The gist of appellants' state law implied-in-fact contract claim is

breach of an actual promise to pay for appellants' creative work. It is not

the use of the work alone but the failure to pay for it that violates the contract

and gives rise to the right to recover damages. Thus, the state law right is

not abridged by an act which in and of itself would infringe one of the

exclusive rights granted by § 106, since the right to be paid for the use of

the work is not one of those rights.

An extra element is required instead of or in addition to the acts of
 -18-

reproduction, performance, distribution or display, in order to constitute the

state-created cause of action. The extra element is the promise to pay.

This extra element does change the nature of the action so that it is

qualitatively different from a copyright infringement claim. The qualitative

difference includes the requirement of proof of an enforceable promise and

a breach thereof which requires, inter alia, proof of mutual assent and

consideration, as well as proof of the value of the work and appellee's use

thereof.

(Emphasis added.) Wrench at 456.

{¶ 32} The court went on to note that:

This qualitative difference is further reflected by the difference in the

remedy afforded by the state law claim. Under Michigan law, a plaintiff's

remedy for breach of an implied-in-fact contract includes recovery of the

reasonable value of the services rendered, considering factors such as the

general practice of the industry. * * *

Under the Copyright Act, remedies for infringement are limited to

injunctions; impounding and destruction of infringing articles; recovery of

the copyright owner's actual damages and any additional profits of the

infringer or statutory damages; and costs and attorneys fees. See 17

U.S.C. §§ 502, 503, 504 and 505. The remedies available under copyright

law do not include damages for the reasonable value of the defendants' use

of the work.

(Footnotes and citations omitted.) Id. at 456-457.
 -19-

{¶ 33} As noted, the trial court primarily relied on Wrench and Perry in concluding

that GEA’s alleged breach of the Software Licensing Agreement was not qualitatively

different from a copyright claim. Judgment at p. 6. The court’s decision was based on

its conclusion that GEA’s acts in modifying or creating a derivative of the TruView software

and passing it off as its own did not contain the required “extra element.” Id.

{¶ 34} Ohio does not have a substantial body of law pertaining to copyright

preemption. As the briefs indicate, there are a few Ohio cases. However, before

discussing those matters, we will first consider the decision of the Seventh Circuit Court

of Appeals in ProCD and its status as an alleged majority viewpoint.

C. ProCD

{¶ 35} As a preliminary observation, ProCD was decided in 1996, i.e., 25 years

ago. See ProCD, 86 F.3d at 1447. Quite a few cases have been decided since then,

both in the Seventh Circuit and elsewhere.

{¶ 36} ProCD involved two issues: (1) whether software purchasers were bound

by “shrinkwrap” agreements, which limited the use of the software application and its

listings to non-commercial purposes; and (2) whether federal copyright law prohibited

enforcement even if the agreements were contracts. Id. at 1450. “A shrinkwrap license

typically involves (1) notice of a license agreement on product packaging (i.e., the

shrinkwrap), (2) presentation of the full license on documents inside the package, and (3)

prohibited access to the product without an express indication of acceptance.”

Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 428 (2d Cir.2004).

{¶ 37} In ProCD, the shrinkwrap agreement was contained inside the software box
 -20-

rather than on the outside, and the purchaser had no choice “because the software

splashed the license on the screen and would not let him proceed without indicating

acceptance.” ProCD at 1452. After reviewing the common law and the Uniform

Commercial Code, the court held that such agreements were contracts and were

enforceable.

{¶ 38} Shrinkwrap is similar to the term being used here, i.e., “clickwrap” or “click

thru.” “Clickwrap is a commonly used term for agreements requiring a computer user to

‘consent to any terms or conditions by clicking on a dialog box on the screen in order to

proceed with [a] ... transaction.’ ” Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1255

(10th Cir.2012), quoting Feldman v. Google, Inc., 513 F.Supp.2d 229, 236 (E.D.Pa.2007).

Generally, courts have upheld clickwrap agreements. Id.

{¶ 39} In discussing the second issue in ProCD, i.e., preemption, the Seventh

Circuit Court of Appeals first noted that three courts of appeal had said that rights created

by contract are not “ ‘equivalent to any of the exclusive rights within the general scope of

copyright.’ ” ProCD at 1454, quoting 17 U.S.C. 301(a), and citing National Car Rental

Sys., Inc. v. Computer Assocs. Internatl., Inc., 991 F.2d 426, 433 (8th Cir.1993), Taquino

v. Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (5th Cir.1990), and Acorn Structures,

Inc. v. Swantz, 846 F.2d 923, 926 (4th Cir.1988). The Seventh Circuit found these

decisions sound, stressing that:

Rights “equivalent to any of the exclusive rights within the general scope of

copyright” are rights established by law – rights that restrict the options of

persons who are strangers to the author. Copyright law forbids duplication,

public performance, and so on, unless the person wishing to copy or
 -21-

perform the work gets permission; silence means a ban on copying. A

copyright is a right against the world. Contracts, by contrast, generally

affect only their parties; strangers may do as they please, so contracts do

not create “exclusive rights.”

ProCD at 1454.

{¶ 40} The Seventh Circuit Court of Appeals then commented that “[a]lthough

Congress possesses power to preempt even the enforcement of contracts about

intellectual property * * * – courts usually read preemption clauses to leave private

contracts unaffected.” Id. at 1454. The court also analogized Section 301(a) to a

federal statute dealing with transportation, stating that:

* * * American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817,

130 L.Ed.2d 715 (1995), provides a nice illustration. A federal statute

preempts any state “law, rule, regulation, standard, or other provision ...

relating to rates, routes, or services of any air carrier.” 49 U.S.C.App.

§ 1305(a)(1). Does such a law preempt the law of contracts – so that, for

example, an air carrier need not honor a quoted price (or a contract to

reduce the price by the value of frequent flyer miles)? The Court allowed

that it is possible to read the statute that broadly but thought such an

interpretation would make little sense. Terms and conditions offered by

contract reflect private ordering, essential to the efficient functioning of

markets. 513 U.S. at [219], 115 S.Ct. at 824-25. Although some

principles that carry the name of contract law are designed to defeat rather

than implement consensual transactions, id. at –– n. 8, 115 S.Ct. at 826 n.
 -22-

8, the rules that respect private choice are not preempted by a clause such

as § 1305(a)(1). Section 301(a) plays a role similar to § 1301(a)(1): it

prevents states from substituting their own regulatory systems for those of

the national government. Just as § 301(a) does not itself interfere with

private transactions in intellectual property, so it does not prevent states

from respecting those transactions. Like the Supreme Court in Wolens, we

think it prudent to refrain from adopting a rule that anything with the label

“contract” is necessarily outside the preemption clause: the variations and

possibilities are too numerous to foresee. National Car Rental [, 991 F.2d

426,] likewise recognizes the possibility that some applications of the law of

contract could interfere with the attainment of national objectives and

therefore come within the domain of § 301(a). But general enforcement of

shrinkwrap licenses of the kind before us does not create such interference.

ProCD at 1454-1455.

{¶ 41} Finally, ProCD also discussed Aronson v. Quick Point Pencil Co., 440 U.S.

257, 99 S.Ct. 1096, 59 L.Ed.2d 296 (1979), which had held that “promises to pay for

intellectual property may be enforced even though federal law (in Aronson, the patent

law) offers no protection against third-party uses of that property.” ProCD at 1454.

Concerning that case, the court noted that:

Aronson emphasized that enforcement of the contract between

Aronson and Quick Point Pencil Company would not withdraw any

information from the public domain. That is equally true of the contract

between ProCD and Zeidenberg. Everyone remains free to copy and
 -23-

disseminate all 3,000 telephone books that have been incorporated into

ProCD's database. Anyone can add SIC codes and zip codes. ProCD's

rivals have done so. Enforcement of the shrinkwrap license may even

make information more readily available, by reducing the price ProCD

charges to consumer buyers. To the extent licenses facilitate distribution

of object code while concealing the source code (the point of a clause

forbidding disassembly), they serve the same procompetitive functions as

does the law of trade secrets. Rockwell Graphic Systems, Inc. v. DEV

Industries, Inc., 925 F.2d 174, 180 (7th Cir.1991). Licenses may have

other benefits for consumers: many licenses permit users to make extra

copies, to use the software on multiple computers, even to incorporate the

software into the user's products. But whether a particular license is

generous or restrictive, a simple two-party contract is not “equivalent to any

of the exclusive rights within the general scope of copyright” and therefore

may be enforced.

ProCD at 1455.

D. Further Interpretations of ProCD

{¶ 42} As to subsequent interpretation of ProCD, TruLogic is correct in that a

majority of federal courts, even Wrench, accept its basic premise, although some

reservations do exist. E.g., Bowers v. Baystate Techs., Inc., 320 F.3d 1317, 1324-1325

(Fed. Cir.2003) (applying what it believes would be the First Circuit’s view and rejecting

preemption); Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424,
 -24-

430-433 (2d Cir.2012) (rejecting preemption where contract was implied in fact and there

was a promise to pay); Acorn Structures, 846 F.2d at 923 [4th Cir.] (action was based on

implicit provision in contract and did not arise out of copyright subject matter); Taquino,

893 F.2d at 1501 [5th Cir.]; Real Estate Innovations, Inc. v. Houston Assn. of Realtors,

Inc., 422 Fed.Appx. 344, 349 (5th Cir.2011); Natl. Car Rental Sys., Inc., 991 F.2d at 432-

434 [8th Cir.]; Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1089-1090 (9th Cir.2005)

(“[a] state law tort claim concerning the unauthorized use of the software's end-product is

not within the rights protected by the federal Copyright Act”); Lipscher v. LRP

Publications, Inc., 266 F.3d 1305, 1318-1319 (11th Cir.2001) (“courts generally read

preemption clauses to leave private contracts unaffected”); Utopia Provider Systems, Inc.

v. Pro-Med Clinical Systems, L.L.C., 596 F.3d 1313, 1326-1327 (11th Cir.2010) (software

license agreement is “extra element” in breach of contract case, thereby avoiding

preemption).

{¶ 43} To the extent that ProCD has “been taken by some to hold that any contract

supplies the necessary ‘extra element,’ * * * [other] courts * * * have rejected the view that

ProCD stands for the universal proposition ‘that no breach of contract action would ever

be barred by § 301 [of the Copyright Act].’ ” Green v. Hendrickson Publishers, Inc., 770

N.E.2d 784, 789 (Ind.2002), citing Ballas v. Tedesco, 41 F.Supp.2d 531, 536-37, n. 14

(D.N.J.1999) (agreeing with courts rejecting the broad view).

{¶ 44} In Green, the Indiana Supreme Court also stressed that “to the extent

ProCD suggests that no state contract claim is preempted, that decision has met with

harsh criticism. As one leading commentator on copyright has noted, ProCD relied on

three other cases, each involving contract rights significantly broader than the simple
 -25-

promise not to reproduce. Accordingly, ‘none supports the broad conclusion that the

Seventh Circuit ascribes to them.’ ” Id. at 789-790, quoting 1 Nimmer, Nimmer on

Copyright, Section 1.01[B] [1][a], at 1-20. Thus, “ ‘pre-emption should continue to strike

down claims that, though denominated “contract,” nonetheless complain directly about

the reproduction of expressive materials.’ ” Id. at 790, quoting Nimmer at 1-22. See

also Canal+ Image UK Ltd. v. Lutvak, 773 F.Supp.2d 419, 445 (S.D.N.Y.2011)

(commenting that “the ProCD decision does not go nearly as far as courts in this district

have taken it. For one, the Seventh Circuit found ‘it prudent to refrain from adopting a

rule that anything with the label “contract” is necessarily outside the preemption clause:

the variations and possibilities are too numerous to foresee’ ”).

{¶ 45} Similarly, while the Sixth Circuit Court of Appeals agrees with the general

premise about contract claims, it has rejected the idea that "all state law contract claims

survive preemption simply because they involve the additional element of promise."

Wrench, 256 F.3d at 457, citing ProCD, 86 F.3d at 1454 and Taquino, 893 F.2d at 1501.

In this vein, the court stressed that “[u]nder that rationale, a contract which consisted only

of a promise not to reproduce the copyrighted work would survive preemption even

though it was limited to one of the exclusive rights enumerated in 17 U.S.C. § 106. If the

promise amounts only to a promise to refrain from reproducing, performing, distributing

or displaying the work, then the contract claim is preempted. * * * As the authors note in

1 Nimmer on Copyright § 1.01[B][1][a] at 1-22: ‘Although the vast majority of contract

claims will presumably survive scrutiny ... nonetheless pre-emption should continue to

strike down claims that, though denominated “contract,” nonetheless complain directly

about the reproduction of expressive materials.’ ” Wrench at 457-58.
 -26-

{¶ 46} The Second Circuit Court of Appeals has also stressed its recognition that

“ ‘preemption cannot be avoided simply by labeling a claim “breach of contract.” ’ ”

Universal Instruments Corp. v. Micro Systems Eng., Inc., 924 F.3d 32, 48-49 (2d Cir.

2019), quoting Forest Park, 683 F.3d at 432. (Other citation omitted.) In this regard,

the court commented that it had previously rejected preemption in Forest Park because

the contract included “an ‘extra element’ of a promise to pay, and plaintiff sought contract

damages when defendant used plaintiff's copyrighted work without paying for the

privilege.” Id. at 49, citing Forest Park at 428. In contrast, in the case before it, there

was no dispute about payment, and the plaintiff did not argue that the defendants violated

an equipment purchase agreement by failing to pay for using the intellectual property.

Id. The remaining part of the contract claim involved rights exclusive under the Copyright

Act, and “vindication of an exclusive right under the Copyright Act, read into a license by

negative implication” was preempted. Id.

{¶ 47} Having extensively read and analyzed federal law on this subject, we

conclude that the law pertaining to preemption of breach of contract claims is neither as

narrow as GEA claims nor as forgiving as TruLogic asserts. We agree with TruLogic that

the majority of federal circuits have generally found that breach of contract claims are not

preempted under the Copyright Act. However, we also agree with GEA that blanket

refusal of preemption is not appropriate and that attention to facts is important. We do

note that even in Wrench, the court did not preempt the claim where an extra element

(implied-in-fact contract with promise to pay) was at issue. Wrench, 256 F.3d at 456-57.

C. Ohio Law
 -27-

{¶ 48} As indicated, the Supreme Court of Ohio did discuss preemption in Perry,

83 Ohio St.3d 41, 697 N.E.2d 624. Ohio cases both before and after Perry are sparse,

both in number and discussion. We have reviewed all the Ohio cases on this subject

that the parties cited, as well as any cases we could find.

{¶ 49} The first case we will discuss is State v. Moning, 1st Dist. Hamilton No. C-

010315, 2002-Ohio-5097. Moning, like Perry, involved a criminal prosecution, and the

defendant there claimed his conviction on a charge of unauthorized use of a computer

was preempted. Id. at ¶ 3-4 and 6. Citing Perry, and without any particular analysis,

the court found that “[t]he element of obtaining access to the computer and the RCIC

database in violation of the rules and restrictions, and thus beyond the consent of the

owner or other person authorized to give consent, is sufficient to satisfy the extra element

test and except the unauthorized-use-of property charge from the express preemption

clause in the Copyright Act.” Id. at ¶ 13.

{¶ 50} Another decision of the First District Court of Appeals dealt with a dismissal

of a claim for lack of personal jurisdiction. See N. Am. Software, Inc. v. James I. Black

& Co., 1st Dist. Hamilton No. C-100696, 2011-Ohio-3376, ¶ 1 (affirming dismissal based

on lack of personal jurisdiction). Before discussing personal jurisdiction, the court briefly

considered whether the case was subject to dismissal based on preemption. The claims

in question involved a “clickwrap” software agreement and the defendant’s alleged failure

to pay after clicking on the agreement and agreeing to pay. Id. at ¶ 4-6. Again, without

much discussion of the law, the court found that some of the plaintiff’s claims “at least

insofar as they seek to enforce a promise to pay, contain an ‘extra element,’ and,

therefore, do not fall within the exclusive jurisdiction of the federal courts.” Id. at ¶ 10
 -28-

and fn. 6, citing Wrench, 256 F.3d at 456.

{¶ 51} In a third case from the same district, which involved an oral contract, the

court again reached its decision (this time that the claims were preempted), based on

minimal analysis. Krapp v. McCarthy, 121 Ohio App.3d 64, 67-68, 698 N.E.2d 1049 (1st

Dist.1997).

{¶ 52} In McCants v. Tolliver, 9th Dist. Summit No. 27253, 2014-Ohio-3478, the

court considered whether the plaintiff’s contract claims against a co-author and a

performer of a song were preempted. Id. at ¶ 1-6. In that case, the plaintiff and the

other parties allegedly entered into an oral agreement that if the song made money, they

would share equally in the proceeds. Id. at ¶ 13. Again, without extensive discussion

of preemption, the court held that the claim was not preempted, because “[t]he alleged

promise to split the proceeds [was] ‘qualitatively different’ than that of a copyright

infringement claim” and satisfied the “extra element” requirement. Id. at ¶ 13.

{¶ 53} The final Ohio case addressing preemption is again from the First District.

See First World Architects Studio, PSC v. McGhee, 2018-Ohio-2158, 114 N.E.3d 654 (1st

Dist.). In that case, First World alleged that the defendants had made unauthorized use

of copyrighted architectural drawings in seeking to obtain a building permit. Id. at ¶ 2.

First World also attached a copy of a contract with one defendant to the complaint, but

did not make claims against any defendant in connection with the contract. Id. Again,

after citing the pertinent tests for copyright preemption, the court simply concluded,

without analysis, that the complaint was preempted because the plaintiff did not make

any allegations concerning a breach of contract. Id. at ¶ 10-12.

{¶ 54} The few lower level decisions are of little assistance here, as they involve
 -29-

quite straightforward situations that do not require much analysis. Furthermore, to the

extent that these cases discuss an agreement to pay, that is not pertinent here, because

GEA’s EULA did not contain such a promise. To the contrary, the EULA indicated that

it was a “perpetual, fully paid-up license.” 2008 EULA at p. 2. While the reference to

past consideration might prove fatal if such a promise were the only basis of an “extra

element,” that is not true here.

{¶ 55} Our review of Perry indicates that the Supreme Court of Ohio may find a

lack of preemption where a software licensing agreement exists. As indicated, the court

held in Perry that criminal charges of unauthorized use against the defendant were

preempted because they involved uploading and downloading, and distribution, and were

not qualitatively different from matters covered by the Copyright Act. Perry, 83 Ohio

St.3d at 45-46, 697 N.E.2d 624.

{¶ 56} Although the State attempted to argue in Perry that violating a licensing

agreement involves an “extra element,” the majority refused to consider this issue

because there was no evidence of an agreement in the record. Id. Three members of

the court dissented, arguing, first, that software licenses are virtually automatic when

software is sold and that the defendant’s no contest plea was an admission that he had

“used software belonging to Microsoft and/or Clark Development Corporation without

consent of the owner or person authorized to give consent.” Id. at 51-52 (Lundberg

Stratton, J., dissenting).

{¶ 57} The dissent further argued that:

A licensing agreement deals with the relationship between parties and

defines the authorized use of a software package. See, e.g., Bourne v.
 -30-

Walt Disney Co. (C.A.2, 1995), 68 F.3d 621. Determining whether use of

computer software is authorized involves an analysis of the licensing/user

agreement rather than copyright law. Natl. Car Rental Sys., Inc. v.

Computer Assoc. Internatl., Inc. (C.A.8, 1993), 991 F.2d 426, 431.

Limitations on use must be determined from the licensing agreement, not

copyright law. Id. at 432. Therefore, enforcement of a licensing

agreement is qualitatively different so as to preclude preemption by federal

copyright law. ProCD, Inc. v. Zeidenberg (C.A.7, 1996), 86 F.3d 1447.

Perry at 52 (Lundberg Stratton, J., dissenting).

{¶ 58} In responding to these points, the majority observed that:

The dissent concedes that no licensing agreement was admitted into

evidence, yet bases its argument on a violation of this phantom agreement,

saying that “issuance of a licensing or contractual agreement with

commercially sold software is virtually automatic.” (Emphasis added.) In

essence, the dissent takes judicial notice of the likelihood that a licensing

agreement accompanied the software, and despite the state's failure to

introduce this admittedly essential piece of evidence, would find the

likelihood of its existence sufficient to prove guilt beyond a reasonable doubt

in this criminal case.

Even if the court could take judicial notice of the existence of such

an agreement for the first time, on appeal, in a criminal case, we would not

know the terms of that agreement and, therefore, would not be able to

determine whether the agreement extended beyond the scope of copyright
 -31-

protections or whether it was violated.

The dissent asserts that Perry's no contest plea establishes, as

admitted fact, that a licensing agreement existed, applied to Perry, was

violated by Perry, and included uses beyond those protected by copyright

law. This assertion is unfounded. Perry's plea is an admission to some

type of unauthorized use. However, it is not an admission that he, without

authorization, used the software in every conceivable way. The state had

every opportunity to clarify what unauthorized uses were the bases for the

indictment. Perry requested a bill of particulars setting forth the specific

and detailed conduct that was alleged to constitute the offenses described

in the indictment, but no response and no such bill of particulars appear in

the record. Reproduction, distribution, and display, uploading, posting,

and downloading are all “uses” of the software. They are the uses alleged

by the state and are all exclusively governed by copyright law.

Further, a consumer software licensing agreement is generally

treated as a contract between the copyright owner or “seller” of the software

and the licensee or “buyer” and is therefore governed by general contract

law and the U.C.C. See ProCD, Inc. v. Zeidenberg (C.A.7, 1996), 86 F.3d

1447; Ballon, The Emerging Law of the Internet (1997) 507; Practicing Law

Institute – Patents 1163, at 1247. There can be legal differences between

licenses and sales contracts that affect the parties' rights under the

copyright doctrine of first sale, but these differences are not implicated in

this case. Accordingly, in the context of this case, licenses are treated as
 -32-

general contracts. See ProCD; Emerging Law of the Internet, at 1247.

What is important to this discussion is the fact that third-party users, whether

authorized or unauthorized, are not parties to the licensing agreement and

generally cannot be bound by its terms. Copyrights are rights “against the

world,” but a licensing agreement affects only its parties and, as such, any

licensing agreement involving the software would be between the copyright

owner and the purchaser. As the state originally brought theft charges

against Perry, it contended that Perry did not purchase the software. Both

the plea hearing transcript and the sentencing hearing transcript also reflect

the state's theory that the software found in Perry's home was not

purchased. Therefore, any licensing terms that did exist would not apply to

Perry.

(Emphasis added.) Perry, 83 Ohio St.3d at 46-47, 697 N.E.2d 624.

{¶ 59} In light of the above statements, we conclude that the Supreme Court of

Ohio would agree that software licensing agreements may appropriately be treated as

distinct from copyrights, and enforcement may not be preempted under the Copyright Act.

In particular, the majority in Perry distinguished between situations where a third party is

not subject to the licensing terms and cases where, as here, the parties are subject to the

licensing agreement. We are not stating that preemption is unwarranted in all or even

many cases; we are simply indicating that such agreements can involve different

considerations than those that arise under the Copyright Act and that Perry is not a barrier

to finding a lack of preemption.
 -33-

C. How to Analyze the Contract Claims

{¶ 60} Another difference in opinion exists concerning how the contract claim in

question should be analyzed. Some courts hold that “the focus * * * is not on the

‘conduct’ or ‘facts pled,’ but on the ‘elements’ of the causes of action.” Tire Eng. &

Distrib., LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 309-310 (4th Cir.2012),

quoting Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 659 (4th Cir.1993). See

also Harolds Stores, Inc. v. Dillard Dept. Stores, Inc., 82 F.3d 1533, 1543 (10th Cir.1996)

(noting that the comparison is to “the elements of the causes of action, not the facts pled

to prove them”). In contrast, the Fifth Circuit Court of Appeals considers both the

elements of a particular cause of action as well as the conduct that is actually alleged.

See Carson v. Dynegy, Inc., 344 F.3d 446, 456-457 (5th Cir.2003).

{¶ 61} After reviewing Perry, we conclude that the Supreme Court of Ohio would

consider both the facts alleged and the elements of the cause of action. Specifically, in

Perry, the majority looked at the elements of the crime, the facts alleged in the indictment,

and the transcript of the plea hearing. Perry, 83 Ohio St.3d at 43-44, 48-49, 697 N.E.2d

624. This makes sense, particularly in the context of a motion to dismiss, because

otherwise a party could simply allege the elements of breach of contract and escape

preemption.

{¶ 62} In the case before us, the complaint alleged a number of breaches of the

2008 EULA, some of which related to matters covered by the Copyright Act, and others

that did not. For example, the complaint alleged, among other things, improper use of

proprietary TruLogic markup and scripting components; repurposing and reusing code

and templates; stripping out code and creating derivative products (implicating reverse
 -34-

engineering), failing to include TruLogic’s logos, end user license agreement, and

trademarks as required by the EULA, using components to develop and improve

competitive products, and creating a mistaken impression that TruLogic was involved in

a defective product, thereby damaging TruLogic’s reputation.

{¶ 63} As indicated, among the exclusive rights under 17 U.S.C. 106 is

authorization of the preparation of “derivative works based upon the copyrighted

material.” 17 U.S.C. 106(2). “Under the Copyright Code, 17 U.S.C.§ 101, a derivative

work is work ‘based upon one or more preexisting works’ and includes any recasting,

transforming or adopting of the original work.” Dun & Bradstreet Software Servs., Inc. v.

Grace Consulting, Inc., 307 F.3d 197, 212, fn. 9 (3d Cir.2002), quoting 17 U.S.C. 101,

and citing Whelan Assocs., Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222, 1239

(3d Cir.1986). From that perspective, repurposing templates could be considered

creating a derivative work, but other matters included in the allegations could not. The

EULA certainly restricted the use of TruLogic’s software in a number of other ways,

including prohibiting reverse engineering.

{¶ 64} Federal courts interpreting EULAs have held that a contractual restriction

on use of software “ ‘constitutes an extra element that makes this cause of action

qualitatively different from one for copyright.’ ” Davidson & Assocs., Inc. v. Internet

Gateway, Inc., 334 F.Supp.2d 1164, 1175 (E.D.Mo.2004), aff’d, 422 F.3d 630 (8th

Cir.2005), quoting Natl. Car Rental Sys., Inc., 991 F.2d at 433. During the subsequent

appeal in Davidson, the Eighth Circuit Court of Appeals held that the lower court properly

granted summary judgment in the plaintiffs’ favor, because by signing the EULA and a

terms of use agreement, the defendants “expressly relinquished their rights to reverse
 -35-

engineer.” Davidson & Assocs. v. Jung, 422 F.3d 630, 639 (8th Cir.2005).

{¶ 65} Similarly, in Micro Focus (US), Inc. v. Genesys Software Sys., Inc., D. Mass,

Civil Action No. 14-14049-NMG, 2015 WL 1523606 (Apr.3, 2015), the district court held

that breach of contract claims based on the EULA “require the extra element of

unauthorized use of the software's end-product beyond the required elements for stating

a copyright infringement claim.” Id. at *3, citing Altera, 424 F.3d at 1089. See also

Meridian Project Sys., Inc. v. Hardin Constr. Co., LLC, 426 F.Supp.2d 1101, 1108-1109

(E.D.Cal.2006) (“[r]everse engineering is not within the scope of the exclusive rights of

copyright”); and Out of the Box Developers, LLC v. LogicBit Corp., N.C. Super. Ct. No.

10 CVS 8327, 2012 WL 5356282, *8-11 (Oct. 30, 2012) (claim of reverse engineering

contains “extra element” and is not preempted where defendant was alleged to have

copied copyrighted material into competitive product for purpose of competing with

plaintiff).

{¶ 66} Based on the preceding discussion, we conclude that the trial court erred in

granting the motion to dismiss with respect to TruLogic’s breach of contract claim. We

express no opinion on the merits of the litigation, but simply indicate that dismissal of the

breach of contract claim was erroneous. Accordingly, the first assignment of error is

sustained. The judgment on this claim will be reversed and the case will be remanded

for further hearing.

II. Unjust Enrichment

{¶ 67} TruLogic’s second assignment of error states that:

The Greene County Court of Common Pleas Erred When, in Its
 -36-

February 11, 2021 Judgment Entry Granting Motion to Dismiss, It Granted

Defendant’s Civ.R. 12(B)(6) Motion to Dismiss Plaintiff’s Claim for Unjust

Enrichment on the Grounds of Preemption by Federal Copyright Law.

{¶ 68} Under this assignment or error, TruLogic acknowledges that federal courts

generally preempt unjust enrichment claims. TruLogic’s Brief at p. 17. Nonetheless,

TruLogic contends that the claim here goes beyond reproduction and use and involves

matters like GEA’s failure to attribute the software to TruLogic and GEA’s failure to include

a copy of TruLogic’s license with its product. The trial court did not specifically discuss

unjust enrichment, other than stating that both the contract and unjust enrichment claims

lacked an extra element that made them “qualitatively different than a copyright

infringement claim.” Judgment at p. 6.

{¶ 69} “In Ohio, unjust enrichment is a claim under quasi-contract law against a

person in receipt of benefits that he is not justly and equitably entitled to retain.”

Crawford v. Hawes, 2013-Ohio-3173, 995 N.E.2d 966, ¶ 34 (2d Dist.), citing Hummel v.

Hummel, 133 Ohio St. 520, 527, 14 N.E.2d 923 (1938). The elements of this claim are:

“ ‘(1) a benefit conferred by a plaintiff upon a defendant; (2) knowledge by the defendant

of the benefit; and (3) retention of the benefit by the defendant under circumstances where

it would be unjust to do so without payment (‘unjust enrichment’).’ ” Hambleton v. R.G.

Barry Corp., 12 Ohio St.3d 179, 183, 465 N.E.2d 1298 (1984), quoting Hambleton v. R.

G. Barry Corp., 10th Dist. Franklin No. 82AP-1021, 1983 WL 3673, *4 (Aug. 10, 1993).

{¶ 70} As a general rule, unjust enrichment claims are preempted by the Copyright

Act. E.g., Briarpatch Ltd., L.P v. Phoenix Pictures, Inc., 373 F.3d 296, 306-307 (2d Cir.

2004) (applying New York law); Natl. Car Rental Sys., Inc., 991 F.2d at 435. The
 -37-

rationale is that while implied-in-fact contracts can avoid preemption, implied-in-law

agreements based on matters like quasi-contract or unjust enrichment do not require

allegations of actual agreements between parties. Forest Park Pictures, 683 F.3d at

432. See also Murray Hill Publications, Inc. v. ABC Communications, Inc., 264 F.3d 622,

638 (6th Cir.2001), abrogated on other grounds, Reed Elsevier, Inc. v. Muchnick, 559

U.S. 154, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010).

{¶ 71} Some courts have held that “[a] claim for unjust enrichment may not be

preempted, however, if the plaintiff can show that ‘material beyond copyright protection’

formed the basis of the unjust enrichment.” WJ Global LLC v. Farrell, 941 F.Supp.2d

688, 693 (E.D.N.C.2013), quoting Microstrategy, Inc. v. Netsolve, Inc., 368 F.Supp.2d

533, 537 (E.D.Va.2005).

{¶ 72} In Natl. Car Rental Sys., Inc., the Eighth Circuit Court of Appeals also

concluded that a claim for unjust enrichment was not preempted. In reaching this

conclusion, the court stated that:

We do not read CA [Computer Associates International] to allege that

National was unjustly enriched as a result of a wrongful exercise of one of

the § 106 rights. Rather, we read this allegation of damage as a further

explanation of the damages CA intends to prove arising from the breach of

contract. CA alleges generally that it has been damaged in an amount to

be proved at trial, and it will have to prove those damages. In this context,

we read its allegations of unjust enrichment as an attempt, albeit inartful, to

allege that National received from Lend Lease and Tilden amounts that CA

would have received had National not breached their contract. Second,
 -38-

National notes that CA requested return or destruction of any copies of its

programs still in National's possession. It notes that the Copyright Act

provides precisely that remedy, see 17 U.S.C. § 504, and claims that the

request for destruction shows the claim is equivalent to a copyright claim.

We disagree. The parties' contract specifically provides for the return or

destruction of the licensed programs upon any breach of the license

agreement. This remedy would apply equally to this asserted breach

(improper use) as to an action for breach of an agreement to pay royalties

or license fees, which National admits would not be preempted.

Furthermore, the copyright remedy of return or destruction applies even

absent a preexisting relationship between the parties: it does not have to be

stated in a contract or license agreement. We cannot conclude that this

action is preempted simply because the parties' contract provides a remedy

for breach identical to a remedy provided in copyright.

(Footnote omitted.) Natl. Car Rental Sys., Inc., 991 F.2d at 435. The fact that a claim

has been poorly phrased and actually pertains to another subject is not a basis for

deviating from the general rule.

{¶ 73} In Tastefully Simple, Inc. v. Two Sisters Gourmet, L.L.C., 134 Fed.Appx. 1

(6rh Cir.2005), the Sixth Circuit Court of Appeals found that while some parts of the

plaintiff’s unjust enrichment claim were not barred by preemption, the claim was still

barred because “Michigan law will not imply a contract where there is a contract covering

the same subject matter.” Id. at 6, fn. 3, citing Barber v. SMH, 202 Mich.App. 366, 509

N.W.2d 791 (1993). Ohio follows the same principle. See Hughes v. Oberholtzer, 162
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Ohio St. 330, 335, 123 N.E.2d 393 (1954) (noting the general principle that there cannot

“be an express agreement and an implied contract for the same thing existing at the same

time”).

{¶ 74} We are aware that “Civ.R. 8(E) (2) permits alternative or hypothetical

pleading, or even the use of inconsistent claims.” Iacono v. Anderson Concrete Corp.,

42 Ohio St.2d 88, 92, 326 N.E.2d 267 (1975). TruLogic, therefore, could have pled

unjust enrichment as an alternative remedy even where an express contract existed.

And, in fact, TruLogic points out in its brief that it pled unjust enrichment as an alternate

theory. TruLogic Brief at p. 17, fn. 1.

{¶ 75} We need not resolve the issue of whether TruLogic could maintain its unjust

enrichment claim despite the general preemption of such claims. As noted, TruLogic

argues that its unjust enrichment claim is based on matters like GEA’s failure to attribute

the software to TruLogic and GEA’s failure to include a copy of TruLogic’s license with its

product. However, these are precisely the same claims that have been asserted

concerning the EULA, an express written agreement. As a logical matter, there cannot

be any claim for unjust enrichment because the written contract covers the same matter.

{¶ 76} Further, TruLogic’s EULA states that it is “the entire agreement between

you [GEA] and TruLogic relating to the SOFTWARE and the support services (if any) and

it supersedes all prior of contemporaneous oral or written communications, proposals and

representations with respect to the SOFTWARE or any other subject matter covered by

this EULA.” 2008 EULA at p. 6-7. Given this statement, we cannot see how a claim for

unjust enrichment could also exist. Accordingly, while our analysis differs from that of

the trial court, we agree that the unjust enrichment claim was properly dismissed.
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{¶ 77} As a final matter, even if we had to decide the matter, we would conclude,

based on the general authority, that the unjust enrichment claim would be preempted.

TruLogic’s argument that this claim should be retained is very brief and does not discuss

the rationale for distinguishing contracts implied in law from express contract claims. As

indicated, a contract implied in law does not contain an actual promise by the side against

whom the claims are asserted. Such promises can provide the “extra element” required

for avoiding preemption.

{¶ 78} Based on the preceding discussion, the second assignment of error is

overruled.

IV. Conclusion

{¶ 79} TruLogic’s first assignment of error having been sustained and its second

assignment having been overruled, the judgment of the trial court is reversed in part and

affirmed in part. This matter is remanded to the trial court for further proceedings.

.............

TUCKER, P.J. and EPLEY, J., concur.

Copies sent to:

D. Jeffrey Ireland
Brian D. Wright
Donald E. Burton
April L. Besl
Jaci L. Overmann
Hon. Michael A. Buckwalter
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